G Lowe & Sze Tu Holdings Pty Ltd v Cudal Nominees Pty Ltd

Re: G. LOWE AND SZE TU HOLDINGS PTY LIMITED
And: CUDAL NOMINEES PTY LIMITED and VIETELL PTY LIMITED TRADING AS
"S.L. TARDY DOUBLE BAY"
No. G873 of 1989
FED No. 277
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Einfeld J.(1)

CATCHWORDS

Trade Practices - sale of shopping centre - misrepresentations regarding permitted usage and tenancies - meaning of "application before council" - effect of statements in sale brochure, contract and leases concerning number of tenancies and lease rentals - duties of disclosure of vendor and real estate agent - misrepresentations by silence - agency implied and ostensible - speedy negotiations and agreement to purchase apparently due to applicant's belief in excellence of investment at agreed purchase price - applicant's failure to take reasonable steps to check respondent's representations - failure to make any searches or inquiries - whether such failure sufficient to deny relief - whether such failure goes to issue of inducement or of misleading or deceptive conduct.

Words and Phrases - "application before council"

Trade Practices Act 1975 sections 52, 53A, 82 and 87

Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191

Gould v Vaggelas (1985) 157 CLR 215

Yorke v Lucas (1985) 158 CLR 661

Concrete Constructions Pty Ltd v Nelson (1990) 92 ALR 193

Neilsen v Hempston Holdings Pty Ltd and Anor (1986) 65 ALR 302

Rhone-Poulence Agrochimie SA v VIM Chemical Services Pty Ltd (1986) 68 ALR 77

Henjo Investments v Collins Marrickville Pty Ltd (1987) 72 ALR 601 and (1988) 79 ALR 83

Sutton v AJ Thompson Pty Ltd (in liq) (1987) 73 ALR 233

Elders Trustee and Executor Co Ltd v Reeves Pty Ltd (1987) 78 ALR 193

Pemberton Australia Pty Ltd v CPS Services Pty Ltd (1990) ATPR 41,034

Argy and Anor v Blunts and Lane Cove Real Estate Pty Ltd (1990) ATPR 41,015

Benlist v Olivetti Australia Pty Ltd Burchett J unreported, 13 August 1990

HEARING

SYDNEY

#DATE 24:5:1991

Counsel and solicitors Mr R. McKeand
for the applicant instructed by Baker and McKenzie

Counsel and solicitors Mr V. Bruce QC and Mr M. Holmes
for the first respondent instructed by Hickson

Lakeman and Holcombe

Counsel and solicitors Miss C.A. Needham
for the second respondent instructed by Barkell and Peacock

JUDGE1

On 23 October 1989 the applicant (as purchaser) and the first respondent (as vendor) exchanged contracts for the sale of land on which stood a two storey shopping centre known as "Shelley's Shopping Village" (the shopping centre) located at 78 Campbell Parade, Bondi Beach. The sale price was $2 million.

On 8 November 1989 the applicant's principal director, Mr Geoffrey Alan Lowe, through his solicitors, Baker and McKenzie, informed the first respondent's solicitors that he did not intend to proceed with the contract because of alleged misrepresentations by the first respondent of the facts concerning the current occupancy and future permitted use of the shopping centre. On 20 November 1989 a notice of rescission was served on the first respondent.
This application, seeking declarations that the respondents breached sections 52 and 53A of the Trade Practices Act (the Act) and that the applicant validly rescinded the contract arises out of this situation. Damages under section 82 and the general law, including the return of the deposit paid on the exchange of contracts, are sought. There is an alternative claim for a declaration under section 87 that the contract was void ab initio. A cross-claim by the first respondent seeks damages for breach of contract.
Mr Lowe is a qualified accountant, is self employed in a computer business, and lectures in Master of Business Administration and Master of Commerce courses. He lives in Sydney's eastern suburbs not far from Bondi Beach. He had undertaken considerable investment in the property market, including in the eastern suburbs, prior to his involvement with this shopping centre. Although all of his experience was said to have been confined to the purchase of residential properties, the evidence left no doubt that it was sufficient to enable him to have made all his decisions in relation to this project with a keen and knowledgeable insight into commercial realities and his company's best financial interests. During 1989 Lowe, who spoke of himself as a "counter cyclical investor", was looking for a property "bargain" since he considered the Sydney property market to be in disarray.
The first respondent developed, built and owned the shopping centre. This company in substance consisted of Mr John Parker and Ms Lorelei Debelle. For some of the relevant time, they were husband and wife. Peculiarly enough, some uncertainty exists in the evidence as to who exactly were the directors of the company. Debelle said in cross-examination that she thought that at the relevant time she was a director. She certainly signed herself as such on several documents in evidence but she testified that she had since been told by Parker that she never was. Parker for his part stated that he and Debelle were directors. This and similar evidential discrepancies appear to have been influenced by what have obviously become less than cordial relations between Parker and Debelle. This in turn affected Debelle's day to day involvement in some of the events relevant to this action and the clarity of some of her answers in the witness box to questions about them. Regardless of the true state of these matters, it is clear that the shopping centre was Parker's building project and that Debelle's major involvement was in respect of its tenanting and marketing and in liaising with the Waverley Council.
The second respondent is a real estate company. One of its directors was Mr Andrew Charles Veron. Damages both under the general law and section 82 of the Act for breaches of sections 52 and 53A of the Act are also sought against this company. As will become clear in the exposition of the facts, Veron informed the applicant that the shopping centre was for sale, provided information to the applicant about the property and was actively involved in securing its sale to the applicant. Lowe stated that at the commencement of negotiations about the price on or about 12 October 1989, he asked Veron to act for him. In fact on 20 October Veron signed an agency agreement with the first respondent and the name of the second respondent appears as the vendor's agent on the contract. On exchange of contracts, the sum of $200,000 was paid by Lowe by way of deposit. Pending the outcome of this application, this money is held in trust by the second respondent, in an interest-bearing cash management account with the Advance Bank.
There is considerable inconsistency between the evidence of the three parties. While it is important to identify the major contradictions, my conclusions as to the liability of the respondents are very largely based upon the facts as alleged by them.
The applicant relied on two sets of allegations of misleading or deceptive conduct. The first is a representation by the respondents that there was an application for council approval of a restaurant on the first floor level of the shopping centre. The second arises from representations concerning the number of tenancies already entered into and the rentals being paid by the tenants. The actualities in both these regards are reasonably simple. The facts in relation to the misrepresentations about them are quite complex.
On 24 May 1988 a development consent was issued by Waverley Municipal Council to the first respondent in relation to the proposed building of the shopping centre. Condition 17 of the consent was that the first floor office space not be converted to a restaurant or night club use. The development application had shown that this was to be or include a "caretaker's flat".
In this connection Debelle testified (T170) that "initially the council did not want a restaurant upstairs". Despite the fact that Campbell Parade, Bondi Beach has a plethora of restaurants, the council's opposition to a restaurant at this site appears to have arisen out of a concern for noise levels that a restaurant might generate for adjacent residences, mostly apartment buildings overlooking the shopping centre. Debelle also testified that there was never a formal application for a restaurant before the council. She explained, however, that informally she had been told by a council officer that approval may be obtained eventually if she took things 'step by step'.
On 14 June 1989 a further application was made to the council to have the existing approval for a caretaker's residence substituted by approval to use the space for retail purposes. Presumably this was in line with the suggested 'step by step' approach. On 14 July 1989 the Town Clerk replied to Debelle that the application had been deferred until further specific details were provided. On 31 January 1990 (3 months after the exchange of contracts), Debelle supplied further information to the council, but by letter of 29 March 1990 council advised that the application for retail use was refused.
In cross-examination Parker stated that as far as he was concerned, this situation amounted, as at exchange of contracts, to "upstairs being currently before council for approval as a restaurant". He seems to have been willing to assume that an application to the council in this regard needed no more than a few informal steps in this direction. As will be seen, this is an untenable position.
On 24 June 1989 the shopping centre was completed and an opening ceremony conducted. At this date four out of the twelve available shops were open for business. They were a beauty shop, a tobacconist shop, a surfboard shop and a coffee shop. Debelle was trying to obtain more tenants. The agents engaged by her for this purpose were Laing and Simmons.
At some point which the evidence did not reveal - apparently it was not the original intention because, as Debelle said in evidence, Parker "loved" the shopping centre and intended to run it himself - the first respondent decided to sell the complex. In June/July 1989 Veron visited the site and had discussions with Debelle with a view to his company's becoming a selling agent. However, Veron testified that he ultimately declined to become an agent for the sale of the property because he thought the asking price of $4.5 million was unrealistic.
There is some dispute about what was said regarding the restaurant question on this and other occasions on which Veron visited the shopping centre. In his affidavit of 25 October 1990 Veron stated that Debelle told him that they were putting in a restaurant and showed him where its kitchen and amenities were going to be built. Lowe said in his affidavit that Veron told him that the vendor had pre-leased the space to "Bill and Toni's". I understand that this is the name of a well-known and popular inexpensive Italian restaurant. Veron admitted (T 278) that he would have said to Lowe that it was proposed that a "Bill and Toni's" type of restaurant be incorporated in the premises. At one point in his cross-examination Veron said that he definitely did not mention that it was pre-leased but later admitted it was possible that he may have done so.
In her affidavit of 19 April 1990 Debelle denied saying that the restaurant was pre-leased to "Bill and Toni's". She admitted in cross-examination (T222) that "I would have explained to him (Veron) that we were working towards that being a restaurant".
On 7 August 1989 Raine and Horne entered into an agency agreement with the first respondent with a view to selling the property. On 26 September 1989 Raine and Horne conducted an unsuccessful auction. Meanwhile, Veron and Lowe were in conversation over some time about available properties. On 5 October 1989 Veron had a telephone conversation with Lowe about various commercial properties on the market in which he thought Lowe may have been interested. This was the first time the shopping centre was brought to Lowe's attention by Veron, although Lowe said that at the time of this conversation he already knew the shopping centre to be for sale. Lowe said (T125) that at all times he understood Veron merely to be passing on information as distinct from acting as the vendor's duly appointed agent. Therefore, when Lowe subsequently wanted to find out more about the property, he telephoned a Mr Pasini from the Raine and Horne office which had conducted the auction.
Again there is dispute about a conversation involving Veron. It is agreed that Veron told Lowe that the shopping centre comprised 12 shops and a restaurant and was expected to return $405,000 per year when fully leased. It is also not disputed that on the same day as the conversation between them, Veron faxed to Lowe a document prepared for the auction entitled "Property Investment Report" which spoke of 13 retail outlets. Veron obtained this report by facsimile from his father who, presumably, had obtained it from Raine and Horne prior to the auction. The original of this document contained, as a schedule, a list of 7 existing and 6 expected tenancies, their terms and the actual or expected rents, but there is a dispute about whether this schedule was included in the fax to Lowe.
Debelle stated (T208) that she sent Raine and Horne the information for the lease schedule. Parker testified that he did not provide any information to Raine and Horne but he was aware that a brochure was being prepared and admitted to assisting in its preparation (T238). Furthermore he admitted to seeing the brochure upon its publication. Although no one from Raine and Horne gave evidence, there can be no doubt that this report was produced for the purposes of the auction at the first respondent's behest by Raine and Horne acting as its agent. This occurred about one month prior to the auction.
Veron testified (T285) that he realised on 5 October (the day he faxed the report to Lowe) that the situation concerning the tenancies might have changed since the report was published. However, he did not at any time contact Raine and Horne or anyone else to check the particulars of the tenancies or any other details. He admitted that before faxing this report to Lowe he "whited out" the references to Raine and Horne on its title page and the top of each inside page. By thus trying to make it appear that it was his own document, it seems that he wanted to preserve what must have appeared to him to be, or what he hoped was, his exclusive relationship with Lowe and to discourage Lowe from approaching Raine and Horne. If a sale was achieved, Veron no doubt believed that he would then become entitled to the entire commission on it. However, he apparently overlooked that the body of the document made reference to Raine and Horne as well as to the auction. Lowe admitted (T86) that he in fact knew it to be a Raine and Horne document prepared for the auction. No doubt he also saw Raine and Horne's disclaimer of responsibility for its contents (p 10).
In his affidavit of 25 October 1990 Veron asserted that the page he said was headed "B" (in actual fact he was referring to what is page 8) containing the tenancy schedule was not faxed. Although Veron supported his own evidence of its non-inclusion by pointing to the fact that no fax number appears on that page, it is more than unclear why it would have been omitted. As the facsimile transmission took place less than two weeks after the auction, it is hardly credible that he could have withheld this page, but included virtually everything else, on the grounds that the circumstances of the existing tenancies may have changed. Despite what Veron says or implies, I have little doubt that he assumed that the tenancy details of the document were still basically accurate. For his part, Lowe disputes the omission of page 8 and says in fact that he received the Raine and Horne report and its page 8 by facsimile from Veron on separate occasions.
What was said to be the original document faxed was put into evidence by the second respondent. From the markings on it, it is clear that the exhibit is the document as originally received by Veron not as received by Lowe. An examination of the exhibit reveals that page 8 has liquid paper markings at the top and that the part of the page which would have contained the inscription of the fax number machine, in contrast to the rest of the faxed brochure where this number appears, has been cut off. This cut seems likely to have been made by or for Veron, and to have occurred before and for the purpose of faxing to Lowe. This is consistent with its having been sent at another time to the rest of the document as Lowe alleges.
The evidence provides no true explanation as to why page 8 would not have been sent at all and I can think of no sensible reason. Because of the presence of the liquid paper, the cut and its inclusion in the exhibit, as well as the obvious interest of an investor in the expected commercial returns and the equally obvious knowledge of an agent of such concerns, I conclude that page 8 was in fact faxed by Veron to Lowe. Why it might have been faxed at a different time to the rest of the document is a matter for speculation. It may simply have been the correction of the error of omitting to send it originally.
Lowe said that he read the document including the rents listed on page 8. Lowe further testified that he made calculations about the yield on the basis of this information. He said that when he looked at the stated rentals as against the price that he might pay for the property, he saw that the return was about double that which was customarily available in the market for properties of that type. Among many other things, this evidence tended to demonstrate a degree of knowledge of and familiarity with commercial investment properties that Lowe appeared anxious to play down.
It is agreed that Veron did not fax to Lowe the glossy front cover of the Raine and Horne brochure, the inside of which contained an architect's drawing of the shopping centre showing the "proposed restaurant". However, it is also agreed that pages 1 and 4 of the report were faxed. Page 1 refers to a "proposed restaurant" and on page 4 the report states that "the largest of the upstairs shops ... is currently before council for approval as a restaurant". Moreover, the estimated annual income of $405,600 for the whole property once fully leased ($600 more than the presumably rounded off figure given by Veron on the telephone to Lowe on 5 October 1989), set out on the mysterious page 8, included $1,200 per week for a "restaurant - vacant".
Lowe testified that since there were restaurants along the length of Campbell Parade, "it would never have entered my mind that there would be a problem" (T68). He therefore assumed that there was "a fair chance of an application (for a restaurant) being granted" (T69).
On page 7 the report reads:

At the present moment, Shelley's Shopping Village is just over half leased, with 7 tenancies in place out of the possible 13 retail outlets.

The 13 included the projected restaurant. The page 8 tenancy schedule listed actual weekly rentals for the 7 already leased shops as follows:

1. Coffee shop $1,000

2. Thai take away $ 550

4. Tobacconist $ 500

5. Surfboard shop $ 600

6. Boutique $ 490

7. Ice cream shop $ 300

12. Beautician $ 400

Lowe had no communication prior to exchange of contracts, or for that matter at any later time, with either Parker or Debelle. He did visit the shopping centre on two occasions prior to exchange - one was on 22 October, a Sunday, when he had breakfast at the coffee shop, the other was after business hours on another, presumably earlier, occasion. Lowe did not make any enquiries prior to exchange to ascertain the viability or takings of the leased shops in the centre or the various lessees' ability to pay or record of paying the stated or any rents. In fact his evidence was that he did not even obtain the original Raine and Horne report until after the exchange of contracts, when he did so for the purpose of including it in his application for a bank loan to finance the purchase of the shopping centre.

Representing to a prospective purchaser that premises are tenanted at a certain rental is not a warranty that the tenant will be able or will want to carry out all the obligations under the lease. However, prior to exchange, changes occurred in the rental arrangements with the existing tenants here so that the original written leases no longer reflected the actual situation. Debelle testified (T214) "that there were verbal agreements that they (the tenants) pay less rent until they were, sort of, more in a position to pay more". In this regard it must be noted that Lowe gave evidence that he was aware of the practice to offer concessional rentals to lessees in new shopping centres. He himself indicated to his bank manager that he was going to offer such arrangements (T155).
It is not entirely clear from the evidence whether the boutique was actually operating at any point of time and if any rent was ever paid but it appears not. Neither was there any evidence regarding the fate of the "Thai take away". The status of both of them in terms of the representations on the page 8 schedule appears at best doubtful. However, there is direct evidence as to the position concerning four of the other five allegedly tenanted shops.
Mr Bouhamdan, the tobacconist, stated (T261) that on or about 24 April 1989 he paid $2,000 by way of deposit to Debelle upon commencement of the lease and that the oral agreement was that no rent would be paid for the initial 8 weeks. He opened the shop for trade on 12 July 1989. In late July Debelle agreed that he pay only $400 a week rent rather than the $500 stipulated in the lease documents. In fact, apart from the $2000 deposit, Mr Bouhamdan paid no other sum by way of rent at any time and on 10 October 1989 he surrendered his tenancy. He was therefore not in actual occupation of the premises at the time of exchange of contracts.
Mrs Martire, who ran the coffee shop, testified that she paid rent at a rate of $750 per week from 24 June (commencement of lease) to 5 August 1989. Following a meeting with Debelle on 4 September, it was agreed that only $500 per week be paid for two months. After 30 September 1989 she paid no rent at all. Hence at exchange, no income was being derived under this lease.
Ms Haider, the beautician, also filed an affidavit. From 24 June to 11 September 1989 she paid $400 per week in rent. She stated that on 4 September 1989 Debelle agreed to reduce her rent by $100 per week for 2 months. This was paid until 18 October 1989. After that date no rent was paid. Again, at exchange, this lease was producing no return at all.
It turns out that the ice cream shop was on paper "leased" to Parker and Debelle but the evidence reveals that rent was never paid by them to the first respondent. There is also evidence that the shop was not open on a regular basis. This was admitted by Debelle in cross-examination although she had said in her affidavit that it was open from 10 a.m. to 4 p.m. Mondays to Fridays and from 10 a.m. to 5 p.m. on Saturdays and Sundays. This "lease" was clearly a sham arrangement to help secure a sale.
Parker admitted that Lowe was not told that they were accepting less than the full rents. Debelle explained that all these rental reductions were agreed to because the figures in the leases were calculated on the basis of a fully let shopping centre. This seems to me to be a euphemistic or polite way of saying that the tenants' incomes were so low that they could not afford the rents charged and that it was more important to the first respondent's chances of effecting a sale of the shopping centre to have tenants tied to leases but in fact paying little or no rent than to have no tenants at all. This can have been the only explanation for the blatantly fake "lease" of the ice-cream shop.
On 13 October 1989 Sly and Weigall, solicitors for the first respondent, sent a copy of the draft contract for the sale of the property to Lowe via Veron who physically delivered it. It contained the usual disclaimer of responsibility for its contents. The draft did not show, but the contract actually exchanged did show, the second respondent as the vendor's agent. This draft contract contained a survey report which referred to the shopping centre as containing a "restaurant". The rents as listed in the third schedule of the draft contract differed from those in the "page 8" tenancy schedule in only one respect. Shop 6, the boutique, was omitted. This seems to support the fact that contrary to "page 8", the boutique was either never let or never rent-producing. It was clearly not operating or producing rent at exchange. Lowe did not ask either of the respondents prior to exchange about the absence of the boutique from the third schedule. During cross-examination (T109) Lowe testified that once he had this draft contract he relied on it. On 18 or 19 October Lowe passed this document on to his own solicitor, James Markham.
Lowe testified that on 19 October he sought by telephone from Veron, and received, copies of 6 leases and had them photocopied. Yet again there is a dispute as to the facts. In cross-examination Lowe explained that it was his staff who actually received and handled the lease documents and that he in fact never saw or read them. Lowe said that the photocopies were delivered on the following day by a member of his staff to Markham to enable him to look at them over the weekend. Veron said that he collected the leases from Laing and Simmons on 20 October and delivered them directly to Markham on that same day, whereupon Markham immediately telephoned Lowe and a conversation took place in Veron's presence. Markham agreed that Veron delivered the leases to his office and that in the presence of Veron he had a telephone conversation with Lowe. That evidence was persuasive. I find that Veron delivered the leases directly to Markham.
Veron alleges, but Markham denies (as does Lowe), that Markham said to Lowe in the telephone conversation that there was no application for restaurant approval before council at the moment and that he would speak to the council about it. At first blush it seems unlikely that Markham, as Lowe's solicitor, would not have checked as much of the contract as he could from the council and any other available independent sources and conveyed to his client whatever he discovered. However, his corroboration of Lowe's denial that he did and the fact that he would have had to have done so within 24 hours of receiving the contract if the results of his checking were to have been included in this telephone conversation with Lowe, makes Veron's account by far the less likely of the two. This is further emphasised by another piece of evidence to which I shall refer shortly.
The evidence discloses that Markham advised Lowe about the draft contract and the leases on Monday 23 October. He pointed out to Lowe that there were certain deficiencies in the documents, especially that some leases were not executed and that all were photocopies. By exchanging contracts for sale that day without seeking to see the original signed leases, Lowe effectively ignored this advice. He did not read the lease documents himself prior to exchange, seek further evidence of what he was buying or instruct Markham to take steps to secure his position in any way. It appears that none of the usual searches or enquiries.
Copies of the leases are in evidence. Only two of them appear fully executed. The rents shown are the same as set out in the "page 8" tenancy schedule and draft contract. The lease for shop 4 contains an error in that the rent stated is "Four Hundred dollars ($500) per week" (my underlining).
There was a further conversation between Lowe and Veron which is the subject of conflicting evidence. Lowe claimed that it took place on 23 October whereas Veron stated that it was on 20 October. Having regard to the subject matter of the conversation and that on 20 October Lowe was awaiting Markham's advice, it seems more likely to have taken place on 23 October.
It is agreed that in this conversation Lowe expressed concern to Veron about the success of the complex and the fact that no work had yet been done on the restaurant. It is also agreed that Veron conveyed to Lowe the vendors' assurance "that there are applications before the council for a restaurant on the first floor", despite Debelle's denial, earlier referred to, that she ever informed Veron that there was such an application. Lowe says that he relied on these assurances. If Markham had made enquiries with the council about the situation concerning the restaurant, he would obviously have communicated their results to his client. As any such enquiries must have resulted in negative answers, it is not possible that Lowe could have relied both on Markham's negative information and the vendors' positive assurances as related by Veron. Veron's evidence that he conveyed the vendor's assurances in this conversation thus again supports Lowe's and Markham's denials that their conversation on 20 October covered this subject and the likelihood that the Veron/Lowe conversation on the subject occurred on 23 October.
I go back a few days to pick up the evidence concerning the actual negotiations for sale. On 12 October Lowe telephoned Veron who said that he was told by Debelle of an offer of $2.1 million "on the table". Lowe asked Veron to act as his agent and told him to offer $2.2 million and to seek a copy of the contract. Veron testified that the offer of $2.2 million was initially rejected. He said that Lowe then offered $2.225 million on condition of a quick exchange. This was also rejected.
It was, according to Veron, on 20 October that Lowe insisted that he would pay only $2 million. Apparently Lowe had made anonymous inquiries of Mr Pasini from Raine and Horne who told him that there was a competing bid of only $2.050 million. I was given the impression that there existed at the time a sense that it was a race between Lowe and the other person interested as to who would be the first to exchange, but there was no evidence that another potential purchaser actually existed. The fact that on 23 October Lowe's offer of $2 million was accepted seems to suggest that there was no other genuine contender. The further fact that Lowe was actually negotiating, apparently before he had seen the property or a single document, plus the speed at which such a substantial transaction was finalised, throws light on Lowe's motivations and concerns.
Except for the actual rescission of the contract, the remainder of the evidence is of less significance. The first occasion on which Lowe spoke to the tenants about their leases was on 4 November when he approached Mrs Martire (coffee shop) and on 6 November the owner of the surfboard shop, a Mr Jones. On 8 November Lowe wrote to Markham who wrote to Sly and Weigall (the first respondent's solicitors) in the following terms:

We wish to advise we have been instructed by our client to inform you that from enquiries made in regards to the Leases and Tenancies herein that there has (sic) been misrepresentations in regards to same by your client Company and as a consequence our client will not be proceeding and will be instituting such proceedings as may be advised in the near future.

On 11 November there was a telephone conversation between Lowe and Veron. Yet again there is a dispute as to what occurred. Lowe said that Veron telephoned to say that he had heard from Debelle that Lowe was rescinding the contract and asked Lowe why this was the case. In his affidavit, Lowe said that he answered:

A lot of the representations made to me are false. The upstairs are not shops they are commercial units. Being zoned commercially some of the shops are there illegally. The directors of the owners run the ice-cream shop and it's not being run commercially. The rents aren't being paid. The restaurant is zoned as a residence. "Bill and Toni's" aren't going to be anywhere near the place.

Veron's account is that Lowe telephoned him, and only complained of the rental reductions. Both agree that Veron then faxed to Lowe a copy of a tenancy schedule dated June 1989 which he had obtained from Debelle in June or July.
According to Lowe, Veron's intention in supplying him with the June 1989 schedule in November was to assist Lowe to obtain a lower price as a condition of proceeding with rather than rescinding the contract. Veron explained that he had not passed on this schedule previously because in October he had supplied Lowe with the Raine and Horne report. The implication was that it was not necessary to do so because it had been superseded by the tenancy schedule on "page 8" of the Raine and Horne report. This confirms my earlier finding, contrary to Veron's evidence, that "page 8" was indeed faxed by Veron to Lowe in early October as Lowe alleged.
The earlier tenancy schedule referred to the "restaurant being pre-leased pending approval from council". Although Debelle and Parker denied knowledge of this document, it has no other suggested or possible source and Debelle admitted that it would have been the normal course of events to supply a tenancy schedule to Veron when he was considering becoming an agent. I have little doubt that whoever actually prepared the document itself, its contents emanated from Debelle or Parker.
Despite its potential as another major ground for complaint of deception or falsity, this earlier tenancy schedule must be of doubtful relevance to this application. Since Lowe did not obtain it until after the exchange of contracts, it clearly did not induce him to enter the contract. It could therefore only be admissible perhaps as Veron's basis for his earlier conversations with Lowe. I doubt that this is sufficient justification of its admissibility and I ignore it, but I shall leave it in evidence for whatever it is worth.
On 15 November 1989 Lowe visited the tenants with a questionnaire. Neither the form of the questionnaire nor the results of it were admitted into evidence. The formal notice of rescission served on 20 November was accompanied by a letter which alleged misrepresentations by the first respondent in regard to the number of tenants, the amount of rental payments and the application to the council for restaurant approval. This notice and letter were sent by Baker and McKenzie who had by this time replaced Markham as the applicant's solicitors in this matter. At this stage Lowe was not suggesting that the second respondent had misled him, although he did suggest misleading and deceptive conduct by Raine and Horne.
Lowe also said that, prior to commencing these proceedings, he "was prepared to go ahead with the property at a significantly reduced price to reflect the rental levels that had been achieved or were achieved at that time" (T118). He was playing a "cat and mouse game ... waiting for someone to approach ... with some form of settlement offer" (T128).
Applicant's Submissions
The applicant made two simple allegations. Firstly, it was told that there was an application for a restaurant in the complex before Waverley Council. The first respondent conceded that there was no such application. The alleged misrepresentation as to the pre-leasing of this space as a restaurant by or in the style of "Bill and Toni's" was not seriously pressed, perhaps because of the absence of evidence from Lowe of any reliance on this assertion. Secondly, the applicant pointed to the discrepancy between the rents stated in the lease documents as being due and the oral reductions of those rents.
The applicant submitted that there also arose two implied representations. One was that there was no reason why the application to council would not be approved. In other words, the respondents misrepresented the position by not revealing the council's refusal of permission for a restaurant and continued reluctance in that respect. The second was that rents were being paid in accordance with the lease documents.
The applicant submitted that reliance on those representations was indicated by Lowe's evidence that he used the documents provided to him to calculate the total yield and by his testimony, corroborated by Veron except as to date, that he sought reassurance regarding the restaurant from Veron prior to exchange.
It was further submitted that as a matter of commonsense, and especially for the purpose of obtaining finance, gross rental income would obviously have been a significant consideration. On the same basis, the likelihood that the shopping centre would include a restaurant was important because it would be a "drawcard" for the public and other tenants and was estimated to attract $1,200 per week in rental income. As the development consent stood, that space could only be used as a caretaker's suite from which it was never suggested that any rental income could be generated.
The applicant's counsel also submitted that since very little was said about the property apart from the tenancies and the restaurant, it must mean that those were important considerations. The prompt action by Lowe to rescind the contract once he found out about the restaurant and the rents was also relied on as a basis for finding that those representations were an important inducement to entering the contract.
First Respondent's Submissions
Tenancies
The first respondent submitted that a distinction should be drawn between the terms of formal leases on the one hand, and the viability of tenants and any establishment or other concessions granted to them on the other. The argument on the first aspect was that there was no misrepresentation by the first respondent in regard to the leases and their terms, because the leases did actually exist and documentary proof was provided. The first respondent denied that the oral reductions of rents altered the "truth" of those documents, because the reductions were only for limited periods and, in the absence of consideration, did not constitute a binding alteration to the legal rights and liabilities as set out in the leases.
As to the second type of subject matter, the first respondent submitted that it did not make any representations as to the viability of the tenants, rental holidays or other establishment concessions. The evidence showed that Lowe was aware of this conceptual distinction and, recognising that the first respondent's representations were confined to formal lease matters, he made or should have made his own inquiries regarding these matters. This was not a case within section 52 or 53A because, it was said, Lowe did not specifically request information regarding the second type of subject matter. The submission implied that only if Lowe had done so, and had obtained incorrect or misleading answers, would a case have been made out.
Restaurant
The first respondent submitted that its only representation in respect of the restaurant was that it was proposed and that approval had not yet been obtained. It was said that at its highest this was a representation that there was an application before council to obtain permission for a restaurant. The first respondent said that this statement was correct because although there was no formal application, the matter was still being pursued through the council.
In any event, Lowe would not have relied on any information provided by the respondents regarding the restaurant but would have relied on his personal expertise, his knowledge of the area and his belief that the council would approve a restaurant.
Therefore, it was submitted, whether or not there was a formal application for a restaurant before council was not relevant to Lowe's thinking. Presumably if he had been told that there was no such application (whether informal or formal), he would still have assumed that there would be no serious difficulty in obtaining approval.
Second Respondent's Submissions

The second respondent submitted that Veron did no more than pass on information, making it clear to Lowe that he had no personal knowledge of the shopping centre. As such he was a mere innocent conduit. Lowe knew that Veron did not tell him much about the property. As far as oral representations were concerned, Veron said no more than that a restaurant was "proposed" and that the vendors had assured him that there was an application before the council.
That Lowe did not rely on Veron is supported by the evidence, so the submission went, that Lowe telephoned Raine and Horne for his further enquiries and initially made allegations of misrepresentation against that firm rather than against the second respondent. He did not seek any independent confirmation that a restaurant application was before council. The second respondent also submitted that in any event Lowe should have made his own enquiries. In fact Lowe did not check the leases or the facts and in effect overrode his solicitor's reservations in this respect.
The second respondent submitted that Lowe did not rely on the Raine and Horne report as a representation made by Veron. The report was out of date, Lowe knew that it was prepared by Raine and Horne, and he understood that it was sent by Veron merely to allow him to work out what sort of investment he might be undertaking. In accordance with Lowe's admission in cross-examination, the second respondent submitted that once Lowe obtained the draft contract, he relied on it alone.
Lowe's Credibility
In coming to my findings in these respects, the respondents submitted that I should doubt and discount Lowe's honesty as a witness. This submission was based on two principal grounds. Firstly, Lowe deliberately evaded answering questions in court on many occasions. That there was evasion, much of it deliberate, was clear enough to me. Indeed, Lowe's refusal to give direct answers to many difficult questions put to him in cross-examination appeared to me to be part of his normal commercial defences or practices. It was nonetheless discreditable for that fact.
Secondly, Lowe brought two false claims into existence to advance his position in this case. One related to accountants' fees of $2,500 of which his accountant, a Mr Conroy, had no record. The evidence of Conroy, and Lowe's evidence on this subject, clearly established that Lowe deliberately produced in Court a bogus business document. The instructions apparently given for the cross-examination of Conroy, designed to establish that Conroy might have been mistaken, compounded this fraud. The other was a claim for accounting costs in the order of $20,000 said to have been paid by the applicant to Geoff Lowe and Associates, an accountancy practice of which Lowe is a member. In substance this turned out to be nothing more than a bill from Lowe to himself. In cross-examination Lowe admitted that the work referred to and embraced in the bill had not in fact been done and that no money had in fact been paid. He said that the claim was made as part of some accounting practice he called an "opportunity cost". Had the sale proceeded normally, he said that it would have been charged in the books as a cost to the applicant. Whatever actual or perceived taxation advantage or other justification it may have been thought to possess, or whatever taxation or other misconduct it might represent, the $20,000 was no more than a "paper" charge which had no justification whatever as part of the claim for damages in this case.
Both of these claims were preposterous. Lowe's attempts to justify them probably amounted to perjury. Furthermore, in cross-examination Lowe said that he had told his bank manager when applying for finance that he had four tenants lined up for the shopping centre when in fact, on his own admission, he had none at that time. All these occurrences lead to an indisputable conclusion that his evidence required the closest scrutiny.
Lowe was also criticised for using a fictitious name when speaking with Mr Pasini from Raine and Horne. Interestingly enough sharp conduct of this kind was also practised without any apparent moral hesitation by his critics, the first and second respondents. For example, it took some time before Debelle eventually agreed that the lease of the ice cream shop to herself and her then husband was a sham, that rent was never actually paid and that, contrary to her affidavit, the shop was only open for irregular hours. Their story about the restaurant is at best prevarication. It is probably worse. For his part, Veron admitted to trying to disguise the source of the Raine and Horne report, at least to the extent of removing his competitor's name and other elements which would have made its origin patently obvious. Veron's evidence concerning the "page 8" schedule was in my view untrue. I suspect that it was a deliberate falsehood. Even if it had been found to be true, the conduct involved would still have been highly questionable. Perhaps these are all shrewd business practices. None of them bring much credit on their perpetrators. In the case of all of them, it added a certain tone or emphasis to the pictures they presented.
The real question arising from Lowe's unreliability as a witness is whether it aids either of the respondents' cases. For even if I found, in every relevant case of conflict of fact between Lowe and others, that Lowe's version was not to be believed - and in view of the activities and evidence of the other parties, this would not be done without careful attention to the credibility of their evidence as well - the rest of his evidence, especially where it is corroborated, and the evidence of persons other than Lowe still have to be examined to ascertain whether any of the heads of claim have been established.
Conclusions
This is an unusual case in a number of respects. One is that the vendor at no stage communicated directly with the purchaser or its solicitor. Although the person who did communicate directly with the purchaser (Veron) was not expressly appointed as agent of the vendor until a few days prior to exchange, it was not argued that the vendor had in fact no control over the use by Veron of the material it produced or authorised. It is clear that the first respondent knew that this material did not reflect the true situation in major respects. For his part Veron knew that he was the sole link between vendor and purchaser and knew the interests of both. He had a very significant financial interest in the outcome of their dealings.
1. Misrepresentations
Restaurant
I find that to say in regard to a property that there is currently an "application before council" is a representation that there is a proper substantive and formal application which the council has been asked to consider in accordance with law. However, this hardly matters here because it was agreed, and it clearly is the fact, that as at the date of exchange, there was no application of any kind before the council for a restaurant. At the highest there is evidence that Debelle had had informal discussions as to how approval for a restaurant might be obtained at some indeterminate time in the future. I conclude, therefore, that the representations in the Raine and Horne report, originally made by Debelle and Parker, and deliberately presented and adopted as his own and passed on by Veron, and those made orally by Debelle to Veron to pass on to Lowe, and then by Veron to Lowe, to the effect that there was such an application, were deceptive and false.
The applicant also based its case on the absence of information by the respondents regarding the existing prohibition to establish a restaurant and council's unexpected attitude in this connection. Although this part of the case was argued as one of implied misrepresentation, conceptually it overlaps with misrepresentation by silence and the law regarding this issue is therefore relevant.
The question of misrepresentation by silence was dealt with in Henjo Investments v Collins Marrickville Pty Ltd both at first instance: (1987) 72 ALR 601, and by a Full Court: (1988) 79 ALR 83. In both, application was given to the statement by Chief Justice Bowen in Rhone-Poulence Agrochimie SA v VIM Chemical Services Pty Ltd (1986) 68 ALR 77 at 84:

... an omission to mention a qualification, in the absence of which some absolute statement made is rendered misleading, is conduct which should be regarded as misleading. So too is the omission to mention a subsequent change which has occurred after some statement which is correct at the time has been made where the result of the change is to render the statement incorrect so that thereafter it becomes misleading.

...

Where an obligation to disclose arises an omission to inform the person to whom the obligation is owed may, perhaps on the basis that that person is entitled to assume some fact or circumstance which does not exist, constitute or be an ingredient in misleading conduct.

...

However, the court will not be restricted to cases where such a relationship has already been held to exist at common law or in equity.

There is no doubt that the first respondent had a duty to disclose the facts to the applicant. Yet neither of the respondents explained to Lowe that the council, contrary to expectations, had explicitly prohibited restaurant use in the existing development approval. Nor that at best the council would take a considerable amount of persuasion over some time to change its mind and that it may never do so. Not only was Lowe told none of that; he was told that, or at least allowed to proceed as if, the contrary was the fact.
To avoid liability under the Act, it was incumbent on the first respondent as vendor, knowing that existing documentation and information given to the purchaser did not reflect the full picture, to tell the applicant of the current factual position, either directly or through the second respondent as the active promoter of the sale on its behalf. I find that its failure to inform Lowe of the existing prohibition on the usage of the upper floor as a restaurant was misleading and deceptive conduct.
The second respondent is in a different position to the first respondent because he had no personal knowledge of the matters that should have been disclosed. However, I found the description of Veron as an innocent conduit somewhat artificial and naive. Veron was acting in trade and commerce for his own commercial interest. His interest was, and remains, a commission on the sale. Although when all or most of the relevant representations were made, he was not the formal written agent of the vendor, it is absurd to contemplate that he would now forgo, or would ever have forgone, this reward for his efforts on the ground that he was nobody's agent and really was doing the applicant and the first respondent a favour out of the goodness of his heart for no reward.
Furthermore, the alterations to the Raine and Horne report, and his delivery of the leases and the draft contract, make irrelevant the absence of a formal agency agreement at those times. Veron was negotiating the sale. He sought, promoted and encouraged it and both independently and as an ostensible or implied agent of the first respondent initially, and actual agent as of 20 October 1989, made representations of fact concerning the restaurant to Lowe. He would obviously have known that the return on the purchase price would be relevant to an investor like Lowe and to any institution from whom funds needed to be borrowed to finance the purchase price. The restaurant would obviously have figured prominently in such calculations.
Thus to accept, as I am asked to do, that all Veron did was to pass on quite innocently, as if a postman or a courier, his client's information, both through the Raine and Horne report and verbally, without attracting any responsibility for his actions, is quite unreal. The Raine and Horne report was not furnished as the work and assertions of Raine and Horne, but as the cheapest and quickest method to present Veron's own representations. The suggestion that the contrary is supported by the fact of Lowe's discussions with Raine and Horne direct is on analysis empty because in fact the evidence discloses that all Lowe ever discussed with Mr Pasini of Raine and Horne was the vendor's price and the number of interested buyers of whom he was aware. Mr Pasini was not called by the second respondent as a witness to expand his involvement beyond Lowe's assertions in this respect.
In Yorke v Lucas (1985) 158 CLR 661 at 666, the High Court stated:

That does not, however, mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.

This part of the Court's judgment was expressed as a doubt and was obiter. However, in my opinion, the second respondent cannot bring itself within the framework for exculpation referred to in these concepts. A trader undertaking obligations of the present type cannot avoid the statutory consequences of misleading or deceptive conduct by deliberately or negligently holding back from acquiring knowledge of the facts or pretending to have none when it is in actual or imputed possession of the facts. It would substantially weaken the protection intended to be afforded by Part V of the Act if the actions and words of Veron in this case did not import a responsibility for their correctness. He had a duty to inquire and to speak up. He failed to carry out those duties.
Tenancies
I find that representations were made by the respondents regarding the number of existing tenancies and the quantum of rents, firstly in the Raine and Horne report as faxed to the applicant by Veron, and then in Sly and Weigall's draft contract and Laing and Simmons' lease documents. All of them contained the statements of the first respondent and were conveyed by the second to the applicant or its solicitor.
In my opinion, the argument that because the oral arrangements lowering the rents were, in literal terms, for limited periods and lacked consideration, there was no misrepresentation, is spurious. The undisputed evidence is that from the inception of the agreed reductions, and in some cases from much earlier in their tenancies, the tenants either paid at the reduced rate until they eventually stopped paying altogether, or did not pay at all. One tenancy was a sham and at least one and possibly two existed only in name, at least on the date of exchange if not before. I think that the rental variations may not all have lacked consideration but this is not the relevant point. Once representations were made regarding tenancies, there was a need for the respondents to represent the facts if they were to avoid the strictures of the Act.
Clearly, the representations in this respect did not reflect the factual situation. The documents supplied were represented as disclosing the actual number of genuine tenants and the rents actually being obtained, not that there was a legal right to sue a lesser number of impecunious or financially embattled tenants for what had turned out to be uncommercial rents. Again it must be said that the silence of the respondents did or was likely to mislead the applicant. Their duty was to tell the truth, to reflect actualities, and they failed to do so.
2. Reliance
Restaurant
This is a difficult and largely intuitive issue to resolve because of its double-sided feature of what Lowe was told and was not told. Lowe's own evidence of reliance is of questionable credibility, and there is no evidence to corroborate him on this matter. To the completely disinterested or objective observer, the mere existence or fact of an application before the council ought not to induce anything or provide any security. Only success in the application would count. My impression from his evidence was that Lowe believed he would succeed in obtaining approval for a restaurant, somehow, sometime - probably better than was likely to be achieved by the vendor - even if what he believed to be the current application failed. I think that he was confident in his own capacities, perhaps with Markham's help as his solicitor and a person with considerable experience in government of the local municipality, to gain council's consent. However, the failure to disclose the council's absolute rejection of the only actual application and its apparently continuing opposition extends the matter considerably; this fact must surely have at least dented if not undermined his belief in his own judgment in the matter.
In Gould v Vaggelas (1985) 157 CLR 215 it was held, in a case of deceit, that where a material representation is made which is calculated to induce the representee to enter into a contract and that person in fact does so, there arises an inference of fact that the person was so induced. In addition, it is only necessary that the relevant representations play "some part" in contributing to the formation of the contract: Benlist v Olivetti Australia Pty Limited Burchett J (unreported, 13 August 1990); Pemberton Australia Pty Ltd v CPS Services Pty Ltd (1990) ATPR 41-034; and other cases therein and hereinafter referred to.
These concepts must be viewed in the light of the respondents' grossly misleading and deceptive conduct in failing to tell Lowe the truth as to the actual situation and to convey the real possibilities concerning a restaurant on the upper floor of the complex as known at the time. This includes their failure to draw attention to the council's unexpected rejection of the only application ever actually made and the difficulty or delay in gaining consent for any retail use at all. Weighing all these factors as I must, I have concluded on balance that this palpably deceptive conduct did influence his decision to contract.
Tenancies
For the reasons given by Justice Burchett in relation to a similar document in Benlist, I conclude that the Raine and Horne report, including "page 8", was a serious document intended to be relied on. The draft contract and leases were certainly put forward as containing factually correct statements. Despite the doubts about Lowe's credibility, I find that Lowe did rely on these documents and that the representations by the respondents as to the tenancies and the rents played a significant part in inducing him to enter the contract.
Failure to Inquire
The respondents' submissions raise for consideration, within the question of reliance, whether the applicant should fail because it did not take reasonable care of its own interests. Do Lowe's qualifications, experience and commercial skills have relevance to the issues raised in this case? Can the disclaimers in the Raine and Horne report and the contract save the respondents?
Chief Justice Gibbs in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 199 said that the "heavy burdens" which section 52 creates cannot have been intended for the benefit of persons who fail to take reasonable care of their own interests.
This principle was described as "fundamental" by Justice Gummow in Elders Trustee and Executor Co Ltd v Reeves Pty Ltd (1987) 78 ALR 193 at 241. Justice Hill in Argy and Anor v Blunts and Lane Cove Real Estate Pty Ltd (1990) ATPR 41,015, after reviewing a number of cases, concluded at page 51,281 that:

A case may perhaps be imagined where an applicant is so negligent in protecting his own interest that there will be a finding of fact that the representation complained of was not in the circumstances a real inducement to his entering into a contract. In such a case the element of causation between misrepresentation and damage will have been severed by the intervention of the negligence of the applicant.

On the other hand, in Neilsen v Hempston Holdings Pty Ltd and Anor (1986) 65 ALR 302 Justice Pincus said at 309 that Parkdale did not mean that if an applicant failed to take care of his own interests he cannot succeed under section 52. A Full Court of this Court in Sutton v A.J. Thompson Pty Ltd (in liq) (1987) 73 ALR 233 endorsed this view when it stated at 240 that:

...if a person is so determined to enter into a contract that he is not in truth influenced by some false representation made to him, he clearly has no case. But there is nothing in the principles cited, or in any other authority which has been brought to our attention, to suggest that a person who has been misled into entering a contract, by false representations of a type which were likely to produce that result, and in fact did so, can be deprived of a remedy because of a failure to check the accuracy of those representations.

Justice Lockhart, as a member of the Full Court in Henjo, with whose reasons for judgment Justice Burchett agreed, stated at 95:

It is no answer to say that Collins Marrickville should have made its own inquiries and that, if it had done so, it would have found out the true position.

After reviewing some authority, his Honour went on at 96:

These decisions support the view that recovery under section 52 is founded by the applicant's actual reliance upon the misleading or deceptive conduct of the respondent although that conduct was not the only factor in the applicant's decision to enter a particular agreement, and although the applicant did not seek to verify the representations or did so inadequately and so failed to discover their falsity.

It is difficult to extrapolate a consistent strain through this albeit potted matrix of quoted observations. I question in passing whether this type of inquiry strictly goes to the issue of inducement or whether it is in truth a part of the determination of whether the conduct complained of is relevantly misleading or deceptive.
However that may be, from the standpoint of a court at first instance, I am not completely sure from the cases what conclusions I am bound to apply to the facts of this case in such a difficult and apparently controversial area of legal principle. My reading of the full decisions to which I have earlier briefly referred, seems to lead to the conclusion that if the proven misrepresentations are to constitute breaches of section 52 or 53A, the purchaser's failure to make appropriate enquiries to ascertain the facts or check the representations made may be relevant in particular cases. This is also my own view. The respondents' submissions that this is one such case require a determination of this question.
As I see it, the present application presents challenging problems in this regard and must be on or close to the borderline. Lowe is a skilled if not entirely admirable business entrepreneur, who despite, or perhaps because of, his professional acumen and significant academic and intellectual qualifications, was on the evidence arguably activated more by a "finger-tip" intuition for a profit than by the revelations of a calculator, any property or investment textbooks or what the respondents had to say.
Significant parts of his evidence, including the reliance that he said he placed on the misrepresentations in question here, are tainted and suspect. His failure to make easy enquiries of the council and the tenants, even perhaps to speak to the vendor directly, and his reaction to such peripheral advice, received from his solicitor, as that the leases supplied were only photocopies of unsigned versions, suggest that he did not really care about the details or any problems in the matter. Lowe's protective antennae may and should have been alerted by his information that four months after the opening of the centre, half of it was still unlet. This would have been reinforced by what he must have seen on his visit to the centre on the day before the exchange of contracts.
All this in turn leads to the conclusion that he thought this transaction to be a financially attractive business proposition and that regardless of any difficulties or deficiencies, he would go ahead. The short period between his first contact with Veron on October 5 and the exchange of contracts on October 23, on a $2 million shopping centre, together with his entry into negotiations and finalisation of "the deal" before any relevant legal checks had been made, add to this perception.
On the other hand, it was a commercial undertaking. Whether it was "good business" must depend on something. The value of the land as undeveloped real estate would be one, and would be unaffected by anything said or done by the respondents. The prospect of a capital gain in due course would be a similar factor. However, the total rents to be received, i.e. the monthly or yearly return on the investment, must have played an important role in his decision to proceed. The limited number of tenants represented as being in occupation at the time of exchange of contracts made even more crucial to the investment that at least these tenants and the rents represented as being paid by them were accurately stated. The real possibility that a restaurant upstairs would be one of the future permissible uses of the property and perhaps the major single contributor to its eventual financial success, must also have been relevant. Lowe's evidence to these effects is thus supported by commercial realities and commonsense.
After giving this matter considerable thought, and not without some doubt, I have come to the conclusion that even though Lowe could have ascertained that the representations made to him were false or deceptive by making some elementary and simply conducted enquiries, I do not think that his failure to do so is so starkly negligent in protecting his own interests as to bring him into any category defined in the cases. Part V of the Act has the essentially simple public interest purpose of seeking to protect participants in commerce from lies and deception: Concrete Constructions Pty Ltd v Nelson (1990) 92 ALR 193. The applicant was the victim of such conduct in critical respects. Although in some examples of evenly balanced commercial circumstances like these, to ignore a failure to take reasonable steps for self protection may make a finding of relevant misleading and deceptive conduct or of reliance on such conduct quite unreal and even a little absurd, I think that this is not one.
3. Summary of Findings on Liability
I find that there were breaches by both respondents of section 52 of the Act. There is no need to make findings under section 53A which in the end was only pressed in respect of the representations concerning the restaurant. I conclude that the disclaimers in the Raine and Horne report and the contract cannot exculpate the respondents from these breaches of their statutory duty. It is unnecessary to rule on the alternative claim for relief under section 87. The cross-claim must fail.
4. Remedies
These conclusions make it obvious that the contract should be declared to have been rescinded and that the deposit should be returned. No legal, evidentiary or other basis has been laid or advanced for an award of damages under the general law against either respondent.
Damages under section 82 for consequential losses suffered are sought. The applicant claims establishment fees and facility charges to take out a loan from the Commonwealth Bank to purchase this property. The bank statements annexed to Lowe's affidavit show a loan charge of $517.81 and a miscellaneous charge of $12,616.62. There is no objective or corroborative evidence that these in fact refer to the loan taken out by Lowe for this purchase. In fact there is no evidence that a loan for this purchase was granted at all and if so on what terms. In my opinion Lowe's affidavit testimony in this regard should not be accepted without corroboration. Not only were two other claimed amounts shown to be shams; bank documents or witnesses could have been but were not produced to establish the facts if these claims were valid.
In my view the claim in an invoice to the applicant by Geoff Lowe and Associates for a total of $22,100 should be rejected. As earlier indicated, $20,000 of this sum was false. The remaining $2,100 is claimed as Lowe's costs to speak with the tenants about their rents and prepare a report on his talks. The report was not produced in evidence and there is no reason to believe that it was ever made. If it was, what evidence there is suggests that it would in substance be a report to himself of his talks with tenants for which he charged but would not have paid, and will not now pay, himself. It seems that his intention was merely to add the fee to the costs of this case. I reject this claim. Similarly the bogus claim for $2,500 for work done by Mr Conroy is, for the reasons given earlier, rejected.
There will therefore be a declaration that the contract was validly rescinded and an order for the return of the deposit. The cross-claim will be dismissed. To give effect to these conclusions and to deal with the questions of interest on the deposit and of costs, as well as any other remaining matters, I shall give the parties an opportunity after their delivery to present, at a convenient time, short minutes of agreed orders or to argue what these orders should be.

[1991] FCA 277

24 MAY 1991